Pots-R-Us deals in ceramic pots and figurines. All sales are conducted on a credit basis and no cash discounts are given. Ignore GST. Ignore all journal narrations.

The following information was extracted from the accounting records at 30 June 2019:

Sales $552,000

Sales returns and allowances 37,900

Cash collected 319,120

Debts to be written off 4,022

Required

3. Assume that Pots-R-Us completed an age analysis of its accounts receivable and determined that an Allowance for Doubtful Debts of $ 10,320 was needed in order to report accounts receivable at their estimated collectable amount in the balance sheet.

1. Prepare the adjusting entry to record bad debts expense assuming that the Allowance for Doubtful Debts account had a credit balance of $2,645 at 1 July 2018.

Date	Account	Debit	Credit

2. Show how Accounts Receivable and Allowance for Doubtful Debts would appear in the balance sheet at 30 June 2019.

3. Explain the treatment of GST and accounting for bad debts if:

1. You were required to write off the balance of a customers account and your business was registered for GST
2. You had to estimate bad debts expenseusing the allowance method for the year end accounts and your business was registered for GST.